Four catalysts for Barrick in 2013

Four catalysts for Barrick Gold to turn things around in 2013

Barrick Gold Corp. had a turbulent 2012, marked by a CEO firing and ridiculous cost increases at its Pascua-Lama project. New CEO Jamie Sokalsky hopes to steady the ship and drive better performance this year. TD Securities analyst Greg Barnes cited four key catalysts that would help the company regain investor confidence.

1. Successful ramp up of Pueblo Viejo mine. It just entered commercial production, and is supposed to reach full capacity in the second half of the year.

2. Demonstrate that Pascua-Lama is back on track. Uh, yeah.

3. Improve operations at Lumwana. This mine was bought in the heat of a contested takeover battle in 2011, and has not performed anywhere close to expectations. Barrick anticipates higher production and lower costs this year, but Mr. Barnes thinks a goodwill-related writedown could be coming too.

4. De-leverage the balance sheet by reducing long-term debt. This could come from selling non-core assets or cost-saving initiatives. The company hopes to unload its majority stake in African Barrick Gold PLC, for instance, but negotiations with a potential Chinese buyer recently broke down.

There is plenty of potential for Barrick to turn things around — Mr. Barnes noted that Agnico-Eagle Mines Ltd. pulled a similar trick in 2012 after a disastrous 2011. He believes that Barrick will have a strong year if it executes well. However, he does not expect its share rebound to match Agnico’s, partly because Agnico had a steeper decline and partly because Pascua-Lama is at least 18 months from completion. He has a buy rating on Barrick stock and a target of US$43 a share.

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